Fear of higher costs a reason for drugs probe

The Office of Fair Trading (OFT) says a fear of increased drug costs is one of the reasons for its probe into medicine distribution, launched last week.

The OFT launched a market study after recent and proposed distribution changes by UK medicine suppliers. Last month, drugs company Pfizer began selling prescription drugs through just one wholesaler, Unichem, and AstraZeneca is currently reviewing its supply methods.

Geoffrey Steadman, a principal case officer at the OFT, told supplymanagement.com there was concern that a single wholesaler could increase drug prices because of the lack of competition.

He added: "Stakeholders in the market have argued that the Pfizer arrangements and others of that type have the potential to increase costs to the NHS or otherwise worsen the service that's provided to pharmacies. The study will consider whether those arguments are likely to materialise."

A Pfizer spokeswoman said the company would co-operate fully with the OFT's study.

The NHS spends over £10 billion per year on buying prescription medicines. Pharmacies in the UK provide more than 800 million prescriptions per year.

Possible outcomes for the study, expected to reach completion by the end of the year, extend as far as a market investigation reference to the Competition Commission.

Last February, the OFT recommended reforms to the Pharmaceutical Price Regulation Scheme. It said its recommendations would deliver better value NHS spend and focus industry innovation on drugs with the greatest benefits to patients (News focus, 1 March 2007).